Sorting through the information flood for usable knowledge for our farm

Tuesday, February 05, 2013

Interstate health insurance...

And other free market tinkering for healthcare reform.

A commenter suggests other reforms would have been better than Obamacare:

"It seems absurd to me to say Obamacare will bring us toward a freer
market. If we all recognize a free market with consumers being aware of
real costs and allowed to make a decision on their own that would
collectively drive the market, than why not recognize that the
conservative position of eliminating interstate insurance purchases
would have been a great first step to introduce market forces. The
other aspect you ignore that has been well-documented in many studies is
that the reason US health care is expensive is in large part the built
in costs and extra testing associated with our lack of liability reform.
That was purposely omitted from Obamacare. Many democrats said they
would deal with that separately, but of course they've forgotten all
about that given the huge donations they get from trial lawyers."

Let's take these two ideas in turn. First the idea that if competition is allowed it will occur. There is no evidence for this whatsoever.

Allowing insurance sales across state lines comes up perennially as a way to drive down the cost of health care.Conservatives argue that allowing a plan from a state with relatively
few benefit mandates – say, Wyoming – to sell its package in a
mandate-heavy state (like New York) would give consumers access to
options that are more affordable than what they get now.

Liberals tend to argue this is a bad idea, contending that it would
create a “race to the bottom,” where insurers compete to offer the
skimpiest benefit packages

A new paper
from Georgetown University researchers suggests a third possible
outcome: Absolutely nothing at all will happen. They looked at the three
states – Maine, Georgia and Wyoming – that have passed laws allowing
insurers from other states to participate in their markets. All have
done so within the past two years.

So far, none of the three have seen out-of-state carriers come into
their market or express interest in doing so. It seems to have nothing
to do with state benefit mandates, and everything to do with the big
challenge of setting up a network of providers that new subscribers
could see. [More]

Avik Roy argues it will just take longer, but so far the results are: nada. This idea also would not touch the "uninsurable" problem, which grows with each new diagnostic test.

As for tort reform, I think the idea is obscured by an availability paradox. We read about multimillion dollar settlements and see the lawyer ads, but don't have a handy comparison to total health care costs. The CBO checked this claim.

Elmendorf wrote that newly available research prompted CBO to update
"its analysis of the effects of tort reform." The agency's conclusion: A
package of reforms that included a $250,000 cap on damages for pain and
suffering and a $500,000 cap on punitive damages "would reduce total
national health care spending by about 0.5 percent."
The federal government would reap a substantial portion of those
savings, the CBO said, primarily through reduced Medicare costs. [More]

Tort reform isn't chump change, but it doesn't really move the needle.At about $5B per year saved it's really not a biggy. (At least that's what we say when they want to reduce crop insurance by a similar amount.) Keep this number in mind: $3T. That is our total health care cost estimate for 2014. (I picked that year because it's a round-ish number.)

Another issue is, as economists of all stripes point out, when you are paid per procedure (Fee For Service), you tend to get more procedures, regardless of "defensive" medicine or not. Personally, I also think American consumers want something done or prescribed, rather than hear, "You'll survive, just outlive it." Most doctor visits are for self-limiting or chronic complaints. Think of the antibiotic overuse (especially in children) that farmers point to when feeding antibiotics is linked to resistance.

I support both ideas. But because Republicans refused to negotiate during the passage of the ACA the ideas never got looked at seriously. When obstruction is your primary goal, why should your ideas be included? Davis Frum agrees. Much of Obamacare, and certainly the mandate, was a conservative idea back when I was a mainstream conservative.

“Nobody was saying that it was
creeping socialism or unconstitutional at the time. A lot of
conservatives were for it,” former GOP senator Bob Bennett told me
yesterday, looking back to the 1993 fight against “Hillarycare.”

The
roadmap for what was then the signature Republican approach to
health-care reform was provided by the once quintessentially Reaganaut
think tank, the Heritage Foundation, which now denounces “the cancer of Obamacare.”
The offending document was written in 1989, at the dawn of the first
Bush presidency, and its rationale for the individual mandate was as
follows:

There is no Republican plan for reforming our healthcare problem, and the two items listed above are good ideas, but hardly an answer. Besides, watch immigration reform. The right now has only one political skill/agenda: stop anything from happening.

1 comment:

using 2 states that only allowed interstate insurance purchases in the last 2 years is hardly representative of what might happen in a real marketplace. Why would insurance companies make an effort to take advantage of that change when they are overwhelmed with preparing for the plethora of regulations and changes that Obamacare is ushering into their business.To me this effort to deny the obvious reality that we see in all marketplaces and the way competition works for the efficient delivery of services and goods when they are allowed to function is similar to the way we see everywhere in our world that anywhere people are serious about stopping the unauthorized movement of people - they build a fence. Prisons, private property, government property, borders, whatever...it's clear it works better than anything else. Yet because of the microphone of the media and their liberal friends, all we ever hear is that a fence at our border is a ridiculous idea that would never work, and only a troglodyte of some sort would entertain it. It's repeated over and over in the media unchallenged and eventually conservatives seem to give up fighting it aggressively. We see the same technique being employed with guns in schools. It's completely obvious that anytime we are serious about protecting something or someone, from Brinks armored trucks and banks to politicions and their families,that we use guards with guns. Yet, we are being told over and over that it's such a stupid suggestion that...that...well it's just unbelieveable that anyone would suggest we protect our schools with guards with guns.

With regard to the study on the potential savings of tort reform, I have read about too many studies that arrive at radically different conclusions to simply believe one CBO study that seems 'out of the mainstream' to me.

Speaking

Search This Blog

Latest Feedback to Incoming

About Me

I am a sixth-generation farmer who hold a degree in Chemical Engineering, a minor in Economics, and served as a nuclear engineer from 1970-75.
Jan, Aaron and I farm 2100 acres near Chrisman, IL. Aaron joined our farm operation in 2008.
I have written humor and commentary for Farm Journal and Top Producer for 20 years. I was the host of US Farm Report from 2005 to 2014, and now serve as Commentator.
I speak often to farm and agribusiness groups on topics from risk analysis to professional development.

About Incoming

Incoming is a collection of current thoughts on the nature of the profession of farming from the perspective of a farmer/writer (see full bio here).

It will soon become obvious to readers I lean to the middle, specifically toward pragmatic libertarianism: preserving individual liberty and responsibility. Another strong influence is my education as an engineer. Now throw in 42 years as a husband, 38 as father, and 30 as a choir director. Not to mention a life of farming.

As for the humor... what can I say? Stuff just strikes me as funny. A lot of stuff, actually.

The Internet has filled a hole in my life I never knew existed. These posts are brief summaries of what I am finding and how I feel it will affect my (our) world.

The opinions are my very own. It was not easy to think them up, and nobody else can be blamed for them. In fact, most people around me brace themselves when I start typing or open my mouth.

I welcome comments. I am exceptionally difficult to offend, and have learned to try to rectify mistakes or errors in judgment as rapidly as possible. And I have had plenty of practice.

Thank you for reading.

For more help with this blog see the FAQ section (Frequently Asked Questions) below.

Frequently Asked Questions

How do the comments work? Click on the "X Comments" at the bottom of the post to add or read comments. Here on Incoming, recent comments are shown in the right sidebar, and I am alerted by e-mail to each one. This is a huge boost in productivity for this two-fingered typist.

*What are "labels"? Labels (often called keywords in other blogs) are an index of topics. To see all my posts on a given subject like "history" click on the label in the sidebar. It can be a convenient way to find a post you sort of remember or see more about a particular subject.